Less
developed countries’ external “debt” impedes their economic development
and attempts to reduce poverty. But it generates huge revenues for rich
countries. In the decade 1994 to 2004, Brazil paid rich country creditors
US$400 billion in interest alone, equivalent to the entire population of
Brazil working a whole year. (1) “Debt” serves various
seamlessly linked purposes, all to the advantage of rich country
creditors.

It is an
indispensable mechanism those countries use to guarantee access to
diminishing global resources. “Debt” sustains a super-abundant net flow of
easy money to their already unimaginably wealthy financial centers. It
helps them to dictate international terms of trade by keeping
resource-rich poorer countries in quasi-colonial dependency.

The deceitful
mass-murderers who invaded Afghanistan and Iraq and overthrew Haiti's
elected government are not concerned about people in poverty. They will
ensure “debt” relief only happens in a way that sustains poor countries’
ability to keep on paying. Periodically, they remake the Procrustes bed in
which they install their victims, the better to amputate what they feel
larger victims don't need or to stretch more puny victims to their optimum
yield.

The latest G7
declaration on debt relief is another exercise in this procrustean sadism.
It reads, “For IDA (International Development Agency) and AfDF (African
Development Fund) debt, 100% debt stock cancellation will be delivered by
relieving post-completion point HIPCs that are on-track with their
programs of repayment obligations and adjusting their gross assistance
flows by the amount forgiven.” (2) So, as many people
have already noted, any gains from what may be forgiven in debt are clawed
back out of “aid”.

“Debt” and Terror --
Who Owes Who?

The moral bankruptcy
of the rich countries shows most clearly in the case of deeply
impoverished countries like Nicaragua. In 1986, the International Court of
Justice ruled that the United States owed Nicaragua an indemnity of US$17
billion for the destruction caused by the terrorist Contra war run by the
White House. Naturally, the US never paid.

After the US terror war against that country
ended in 1990, Nicaragua owed over US$10 billion. Of that total over US$4
billion was owed to Russia and Mexico. Russia and Mexico cancelled
Nicaragua's debt completely.

But the United
States and its allies and their financial prosthetic aids, the IMF and the
World Bank, have continued to help squeeze every last drop of value from
Nicaragua they can. Whether the US pressured the Russian and Mexican
governments into forgiving the debt as part of some labyrinthine power
game is moot. Nicaragua's example puts the basic terms of the typical
"debt" relationship emphatically.

Rich countries wield
the ultimate argument -- military and economic might. Whether it is France
in the Ivory Coast, Australia in its neighboring Pacific islands, Canada
and France in Haiti, or the US in Iraq, “Do what we want, or else...” is
the fundamental message. US protection for terrorists like
Luis Posada Carriles or Orlando Bosch and covert support for
drug-dealing paramilitaries in Colombia are footnotes that confirm the
overall global reality.

Rich imperialist
nations pillage poorer ones and destroy countries that resist their
rapacity. The plight of the Palestinians, of Mozambique in Africa, or
Vietnam in Asia are emblematic of the global pattern of which Nicaragua
and Haiti are the most obvious examples in the Americas. And yet
discussion of debt is generally pitched in the very terms of the
neo-colonial gangsters who deliberately drove their victims down into
poverty in the first place.

“Debt” and Class

Most discussion of
the “debt” issue is quarantined from these wider political considerations.
Cosseted economists write cold-blooded technical papers on the issue as
though it had little to do with hundreds of millions of real people.
Warmongering politicians like Britain's Finance Minister Gordon Brown are
permitted to cloak themselves in bogus righteousness while making
obviously hypocritical claims about “debt cancellation.”

In this, the
economists and politicians are abetted by a comfortable class of rich
country “non-governmental” organizations. Outfits like Oxfam UK and the
plethora of their European counterparts receive millions from their
governments and from the European Union. These organizations represent the
soft extra-mural arm of their countries’ official foreign policies. They
lend moral legitimacy to their governments’ claims of good intentions with
which the road to hell for the majority world is all too cruelly paved.

The fact that
discussion around debt by these organizations seldom if ever raises the
issue of reparations of colonial war crimes committed by their countries’
governments or environmental crimes committed by their countries’
multinational energy and mining corporations is very relevant. The NGOs
will respond that they are being realistic. But there is nothing realistic
about ignoring the very recent historical context. There is a hollow
implausibility at the heart of NGO claims that they were responsible for
getting governments to recognize and address the “debt” issue.

Well-meaning
campaigns around “debt” end up lathered in mainstream media froth. Rich
country governments are managing and re-packaging the “debt” problem
because if they do not, the whole rotten system that sustains their
societies will crash into crisis. Some idea of the gap between rich
country rhetoric of good intentions and the grotesquely unjust reality can
be gauged from the continuing agony of Nicaragua. A UN study suggests
poverty in Nicaragua increased from 69% in the 1990s to over 80% now.
(3)

For the development
significance of that statistic one can consult a paper on external debt
for the Harvard International Development Institute. It states: “Assuming
a conservative population growth rate of 2.5 percent per year, the GDP in
Honduras and Nicaragua will have to grow at a constant rate of about 6
percent per year during the next forty years simply to reach the income
per capita that Costa Rica has today.” (4) Typically, the
authors refrain from mentioning the role of US aggression in beggaring
Nicaragua's people.

Who Writes the Rules?

But even within the
artificial moral bubble within which conventional discussion about “debt”
floats in mid-air, contradictions abound. Writing about the latest G-7
“debt” initiative, the European Network on Debt and Development notes that
the aid held back under the “debt cancellation” scheme would be
administered on the basis of heavy-handed donor country conditionality.
(5) Obviously, different countries have different kinds
of debt and different problems relating to the economic and financial
sustainability of their “debt”. Yet no independent mechanism exists to
define criteria for the right debt management policy appropriate for each
country.

Elaboration of such
criteria is left mostly to multi-lateral outfits like the IMF and the
World Bank who have always worked deliberately and decisively to sustain
the economic and political dominance of the countries that control them --
the United States and its allies. Under such a system, no independent
mechanism to implement ways of resolving issues of “debt” will ever be
allowed to exist. There may be much self-congratulation for therapeutic
measures to make sure that debt is financially and economically
sustainable. But the system of international debt-peonage will not be
radically reformed let alone dismantled unless debtor countries combine
against it.

As an expert panel
for the Economic Commission for Africa has noted, “the lack of a
consolidated African position and an effective and collective voice to
engage in constructive dialogue with Africa's partner countries and
institutions with regard to debt relief was at the heart of the problem.”
(6) Similarly, the Economic Commission For Africa
declared in 2002, “Due to the difficulties of determining which debts
should be cancelled, there is need for an internationally agreed
arbitration procedure that is administered independently and by neutral
institutions.” (7) Developing from similar concerns, the
Venezuelan government's proposal for a Bank of the South is a concrete
practical proposal for less developed countries to organize their own
institutions and regain some autonomy. (8)

Governments of less
developed countries could organize around other demands. Obvious damaging
anomalies include the system of offshore banking centers that permits
wealth from poorer countries to be siphoned off beyond control of the
global financial system. The much-vaunted “war on terror” leaves these
grotesquely anomalous pirate plutocrat oases untouched. Likewise, sensible
regulation of international money markets might help vulnerable countries
avoid being left to the mercy of unscrupulous banks and financial houses
that have crucified countries like Brazil or Argentina while making
fortunes for their shareholders.

Re-vamp: Procrustes as Dracula

Procrustes’ bed has
been remade under various covers since the eternal “debt” burden began to
affect the stability of the international financial racketeering system
from the 1970s oil-price shock onwards. By the late 1980s the Paris Club
of OECD creditor countries and their debtors had devised terms that
underwent various modifications, eventually morphing into the Highly
Indebted Poor Countries initiative (HIPC). HIPC offered a slight
ratcheting down of the “debt”-rack mechanism for weaker countries in
three-year stages.

The aim is to get
the victim back to “debt sustainability” so the living death process can
be continued more efficiently. The terms are conditioned on the victim
agreeing to sign away their autonomy so their tormentors can leech off
even more of their wealth and natural resources. World Bank authors
frankly concede that stretching “debt” victims too far is
counterproductive, “resolving debt distress is costly. For example, costs
associated so far with the debt reduction of the poorest countries of the
world under the original and enhanced HIPC Initiative is [sic] estimated
at $50 billion.” (9)

The same study on
“debt distress” notes that “debt” crises damage the racket's own
sustainability, “Holding constant future donor infusions into IDA, it is
clear that any disruption in this flow of future repayment resulting from
episodes of debt distress will have significant implications for IDA's
ability to provide new lending to the poorest countries.” They also note
that the Millennium Development Goals commit rich countries to a huge
increase in development aid. But few rich countries have any real
commitment to implementing those goals, as can be seen from their miserly
development assistance allocations, ludicrously short of the official UN
target -- 0.7% of GDP.

Even taking the
Millennium Development Goals at face value, little consensus exists as to
the nature of the aid, its terms, priorities, or conditionality. This
creates further jeopardy for the international “debt” racket: “Financing
the MDGs on inappropriate terms could lead to the re-emergence of debt
problems in these countries and would undermine the very development goals
that they are trying to achieve.” (10)

Resisting "Debt"-Based Intervention

Most less developed
countries are subject to volatile changes in export earnings as a result
of “free (rich-country-rigged) markets.” So they cannot plan medium or
long-term economic strategies without external financial support when
their export prices collapse. In countries with a high incidence of AIDS,
economic growth is jeopardized by the catastrophic decline in the number
of economically active people and in the population's ability to care for
them. Natural disasters, like hurricanes, floods or earthquakes cost
billions of dollars when they occur. Fluctuations in income after falls in
domestic tax revenue or foreign development assistance flows
disproportionately affect the ability of impoverished countries to plan
successfully.

Those imponderables
for impoverished nations are compounded by crass, ideology-driven
interference by the IMF, the World Bank and their regional clones. The
eternal program seldom varies: privatization, slashing state sector
resources, market liberalization and capital deregulation. Often it is
combined with corporate-welfare investment interventions like Plan Puebla-Panama
in Central America, imposing infrastructure programs that have very little
to do with the needs of the region's poor majority. Following the failure
of the 2003 Cancún World Trade Organization talks, rich countries have
taken advantage of the “debt” extortion racket to press grossly
disadvantageous “free trade” deals on countries desperate for “debt”
relief.

The record of
privatizations of public utilities has generally been to dramatically
increase prices and lower quality of services to the people who need them
most. Poor countries could accumulate reserves and manage their debt
better by resisting the faith based, “free market” speaking-in-tongues of
IMF and World Bank bureaucrats. Every country has its own specific
characteristics and needs. Alternative economic programs should not be
hard to devise. A typical sovereignty-recuperation package would veto
further privatization and re-nationalize private sector monopolies
resulting from those already undertaken.

Fiscal measures
lowering the prices of basic goods would enable families to reduce their
basic living costs, especially in countries where poverty affects over 70%
of people. Helping the poorest should be accompanied by efforts to raise
taxes on imported luxury items. Financial measures might include dropping
interest rates to levels that generate more activity with only marginally
higher levels of inflation. Regulating capital flows and pressuring banks
to loan more productively might be other ways to use capital controls in
the national interest rather than against it.

The Way Out of “Debt” and Injustice:
History Again

Corporate greed
protected by rich country neo-colonial mobster governments and their
enforcers in the IMF and the World Bank have provoked unprecedented
environmental, economic and humanitarian crises in the majority world
comprised of less developed countries. It is hard to disagree with former
IMF chief economist Kenneth Rogoff who wrote recently, “Debt collection
from poor nations is an absurdity, now and into the distant future....”
(11)

His objection is
fundamentally an economic one. The equally cogent moral objection to poor
countries' external “debt”, often made by NGOs, is not that it is absurd
or impractical but that it is unjust and counterproductive.
(12) Things are worse than that. Current efforts to secure a just
cancellation of poor countries foreign debt will continue to fail because
rich countries are never going to relinquish control of the global
resources they need to sustain their societies’ profligate, greedy,
inherently unjust lifestyles.

Practical responses
to that reality include Cuba's insistence on self-determination and
self-respect. Likewise, Venezuela has shown that resource-rich countries
can implement sovereignty-recuperation programs to undo the havoc wreaked
by decades of neo-colonial subservience to the United States and its
allies. It is these models that offer the best way out of endless “debt”
for less developed countries. They render marginal the proliferating
verbiage generated by the opposing sides of the rich-country “debt”
industry. In Latin America at least, history never ended. It took a
well-deserved break in the Caribbean.

toni
solo is
an activist based in Central America. He can be reached via his web site:
www.tonisolo.net.